Mr Trebeck and Penrice’s deputy chairman Andrew Fletcher were re-elected to the company’s board at its extraordinary general meeting in Adelaide on Friday. The pair had to fight for re-election after the company received two consecutive votes of more than 25 per cent against its remuneration report at two previous annual general meetings.

Critics of the two-strikes rule have said votes against a company’s remuneration report are often cast in response to broader concerns around company performance. Mr Trebeck said this was the case at Penrice Soda, which had struggled with poor performance, a tumbling share price and an absence of shareholder dividends.

“In Penrice’s case this wasn’t a debate about executive pay," he said. “It was a debate about other things and that’s the problem, if the stated purpose of the legislation is going to be hijacked for other reasons."

“Shareholders still have plenty of opportunities to move against the board that they feel is not performing well, through the normal EGM process," Mr Trebeck said.

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Mr Trebeck said the policy was particularly difficult for small companies that did not have large institutional shareholders. With a dispersed share register, it was time-consuming to communicate with a large proportion of shareholders, he said.

“There are some things specific to Penrice and I don’t say that Penrice is utterly representative of the whole listed company space, but our experience is part of that and it is important," he said.

Co-founder at proxy advisor firm Ownership Matters Martin Lawrence said he did not support the two strikes legislation, but added: “I think the argument that we have heard over and over again that it will be a stalking horse for control is just wrong."

Following two strikes against a remuneration report a company must hold a separate resolution at the annual general meeting, which must be passed by a majority before a board spill meeting is to be held.

The outcome of proxy votes at the Penrice Soda EGM was enough to confirm the incumbent board’s re-election. A final poll showed more than three quarters of shareholders who voted, supported the chairman and deputy.

Outcome of resolutions to elect nominees to the board of Penrice Soda

Board nominee

Votes for (%)

Votes against (%)

David Trebeck

77.80

22.20

Andrew Fletcher

78.44

21.56

John Harvey

25.49

74.51

Shay McQuade

25.14

74.86

Mike Carter

25.55

74.45

Source: Penrice Soda

The three board nominees put forward by the Penrice Shareholders’ Action Group, John Harvey, Shay McQuade and Mike Carter, did not receive majority votes and will not join the company’s board.

About 80 people, including media and advisors, attended the extraordinary general meeting held at the Adelaide Convention Centre.